Key facts
- The Japanese yen briefly strengthened to the upper 156 range against the US dollar.
- The yen's surge occurred late Friday night into early Saturday morning Japan time.
- The Bank of Japan conducted a rate check, a move often interpreted as a precursor to intervention.
- The yen had its strongest week since a joint yen-buying operation with the US in late July.
The Japanese yen spiked by more than 1 yen to the upper 156 range against the dollar late Friday night into early Saturday morning Japan time, after the Bank of Japan carried out a rate check, often seen as a precursor to currency market intervention. The yen had its strongest week since Tokyo and Washington teamed up to buy it in late July, trading around 156 per dollar on Friday, September 4, after surging for two straight sessions. This performance put it on track for about a 2.5 percent weekly gain. Hawkish signals from the Bank of Japan, including board member Hajime Takata floating the possibility of outsized or back-to-back hikes and Governor Kazuo Ueda warning on upside price risks, repriced Japanese rates higher. Reported US pressure on Tokyo to support the yen through tighter policy also contributed. A softer dollar, with Fed Governor Christopher Waller indicating openness to holding rates steady if inflation continues to ease, further supported the yen's recovery. The yen had previously sunk toward 40-year lows in late July due to wide interest rate differentials and fiscal concerns. The September outlook for USD/JPY sees trading mainly between 156 and 162, with forecasts pinning the pair near 160 before drifting toward 158 into 2027.